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Medicare rural bonus payments left unclaimed

Physicians are unaware of the funds and confused about eligibility.

By Markian Hawryluk, amednews staff. Aug. 4, 2003.

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Washington -- Physicians providing Medicare services in underserved areas are not claiming bonus payments available to them, according to a recent study by Rand, a nonprofit research group.

The findings come at a time when rural physicians are complaining that Medicare is shortchanging them. But even doctors who are aware of the bonus program struggle to determine whether they are eligible. That has left Medicare's primary means of protecting the rural health care safety net largely ineffective.

The study found that bonus payments rose substantially in the first half of the 1990s but had begun to decline by 1998, the latest year for which data were available.

The analysis was done for the Centers for Medicare & Medicaid Services and published in the July/August Health Affairs.

"We found that a lot of physicians who could be collecting the payments aren't asking for them," said Lisa Shugarman, the study's lead researcher. "We don't know why. They may not be aware they qualify, the paperwork may be onerous, or they may be concerned about being audited."

The payments were established by Congress in 1987 to retain physicians in underserved areas and to attract new ones. The program provides a 10% increase in Medicare rates for services provided to beneficiaries in health professional shortage areas.

These areas, designated by the Health Resources and Services Administration, must have less than one primary care doctor per 3,500 people, must be rational locations for primary care delivery and must have primary care work forces that are overutilized or far from the patient population. In 1997, 64% of nonmetropolitan counties included at least one shortage area, and about 10% had no active primary care physician. Neither the doctor nor the patient need to reside in the shortage area, but the service must be provided within that boundary.

Confusion abounds

The bonus payment system is administered by Medicare Part B carriers, which are responsible for educating physicians about the availability of the funds and the use of a modifier to bill for the bonus. But carrier education has varied throughout the country.

"The process itself is awfully confusing," said Bob Perna, director of health care economics for the Washington State Medical Assn. "I must get about 10 different notifications a month about all the various ebbs and flows in what is an underserved area and what isn't." He said the state's carrier, Noridian, has posted information on its Web site to publicize the bonuses, but many doctors are simply unaware that the funds are available.

"When you get into rural areas, the labor pool is not always as skilled about billing," Perna said. "You have to search long and hard even in urban areas to find people who have good medical billing experience."

In addition, carriers often are confused about what locales qualify as shortage areas, said Karen Whitaker, director of the Office of Rural Health at Oregon Health and Science University in Portland. Bonus payments also have been an unintended casualty of a move to support community health centers.

"Our primary care office is designating entire counties medically underserved areas in lieu of having the geographic health professional shortage area designation, which then facilitates establishment of new community health centers but takes away the Medicare bonus payment for physicians," Whitaker said.

She contends that the bonus approach is fundamentally flawed because so few doctors practice in shortage areas. "It's a rare occasion when you have someone who qualifies."

Elizabeth Raduege, MD, a family physician in Hayward, Wis., said that while she's heard about the bonus program, she does not know whether she's eligible or even if she's getting the bonus payments. But she knows that practicing in a rural area, with a heavy Medicare case load and falling reimbursement levels, has been a constant struggle.

Seeking fairness

"Our surgeon probably right now feels somewhat overworked because he's on call basically 365 days a year unless he works out some cross-coverage arrangement with a surgeon 30 miles away," Dr. Raduege said. "But we probably don't have enough surgical business ... to justify having another surgeon."

Dr. Raduege sees patients from 30 to 40 miles away, handling everything from obstetrics to geriatrics out of necessity. Many of her patients can't travel the 70 miles to the nearest specialist, so they wind up getting treated at a lower cost by Dr. Raduege and other local primary doctors.

"We probably are more efficient in what we do." But Dr. Raduege contends that rural physicians are being penalized for that efficiency. Rather than relying on a confusing bonus program to level the playing field, Medicare should provide greater equity in rates, which are lower in rural areas, she said.

"If people were able to look across the board, and whatever area of the country you're practicing in, there's a feeling of equality and fairness, then everyone would be happy," she said.

Senators from rural states included a temporary pay increase for rural physicians in the recently passed Medicare reform bill. The House version of the measure would establish a new bonus payment of 5% to work in conjunction with the existing bonus program. Eligibility for the extra bonus would be based on the ratio of patients to doctors in the county.

The new bonus program is intended to better target funds to physicians in communities that need them most, said Kim Deti, a spokeswoman for Rep. Jim Nussle (R, Iowa), who authored the provision.

Both bills also would direct Medicare officials to determine whether a physician is due a bonus. Currently, physicians must determine their eligibility. At press time, House and Senate lawmakers were still negotiating which approach to take in the final bill.

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